Choosing between a short-term and long-term interest rate is an important financial decision you will make as a homeowner. Our Interest Rate Comparison Calculator is a powerful tool that helps you compare these options and make data-driven decisions with confidence.
In this guide, we will explain how the calculator works and how to use it to maximize your financial outcomes.
How to Use the Interest Rate Comparison Calculator
Our Interest Rate Comparison Calculator is simple to use and gives you fast, actionable insights. Here’s how it works:
Step 1: Enter Your Loan Information
Input four key details:
Short-Term Interest Rate (%) — the rate for the initial period
Short-Term Duration (Months) — how long the short-term rate applies
Long-Term Interest Rate (%) — the alternative fixed rate you are considering
Long-Term Duration (Months) — the full loan term if you lock in today
Step 2: Calculate Your Break-Even Future Rate
The calculator automatically determines the “break-even rate” you would need after your short-term loan expires. This tells you the refinancing rate that would make the short-term option better compared to the long-term rate.
Step 3: Apply the Results to Your Decision
Use the results to weigh your options.
If you believe interest rates will stay below the break-even rate, a short-term loan might save you money.
If you expect rates not to be below the break-even rate, locking in a longer term could save you some interest expenses.
Use The Calculator:
Interest Rate Strategy Calculator
Additional Tips for Better Financial Decision-Making
While using the calculator provides valuable insights, keep in mind:
Monitor current economic trends and central bank rate forecasts
Consider your own risk tolerance and future financial plans
Work with a qualified financial advisor if making large or complex borrowing decisions
Additional Resources
